JOINT COMMITTEE ON FOREIGN AFFAIRS debate -
Tuesday, 22 Mar 2005

Comhlámh Action Network: Presentation.

Chairman

I welcome Mr. John Slattery, Conall Ó Caoimh and Ms Carol Doyle of Comhlámh, development workers in global solidarity. Discussion with Comhlámh centres on the World Trade Organisation ten years on, the agreement on agriculture, the European free trade agreement and EPAs. Before we commence, I remind the meeting that while members of the joint committee have absolute privilege, those appearing before the committee do not. I ask delegates to limit their contributions to no more than ten minutes to facilitate a discussion with members afterwards.

Much has happened since members of Comhlámh appeared before the Sub-Committee on Development Co-operation in December 2003. It is appropriate, therefore, that we have an opportunity to hear from them. I will be representing the joint committee at the Fifth Forum on Democracy and Free Trade in Doha, Qatar next week. This will be a wide-ranging conference covering issues ranging from trade, through agriculture to education, as well as the role of women.

The joint committee has also supported the Irish development co-operation programme, on which it has issued reports in the recent past. Perhaps we could commence with the presentation from Ms Carol Doyle.

Ms Carol Doyle

I thank the joint committee for the invitation to make this presentation today. Comhlámh is the association of development workers in Ireland. We have members throughout the country and offices in Dublin, Cork and Northern Ireland. This year Comhlámh celebrates its 30th birthday.

In our presentation today we will examine the impact on developing countries of our trade agreements concluded through the European Union. Mr. John Slattery and I represent the Comhlámh Action Network in Cork which campaigns on agriculture. Mr. Slattery will deal with the agreement on agriculture concluded by the WTO in its tenth year while Conall Ó Caoimh will deal with the new economic partnership agreements and their impact on African,Caribbean and Pacific countries.

Mr. John Slattery

It is a year for birthdays. The agreement on agriculture within the World Trade Organisation was ten years old in January this year. It was devised in the main by the big trading countries, the United States, the European Union and others, but was intended to help developing countries to trade in open markets and develop as Ireland did within the open market of the European Union. I want to address two reasons developing countries are not managing to participate in and benefit from the agreement on agriculture. While it is ten years old, the agreement is still not being implemented. The European Union, one of the big players, is continuing to drag its heels in terms of its commitment given in the agreement.

When it started out, the World Trade Organisation tried to get a level playing pitch with no subsidies and tariffs. These would be dropped to have a level playing pitch for developed and developing countries. However, the European Union has been found wanting. In 2003 it subsidised the six biggest sugar processors by €800 million. The so-called "peace clause" protected the European Union which claimed continually that it was not subsidising and that a peace clause within the agreement on agriculture protected it from challenges. However, this clause ran out last year. Immediately, under challenge, the European Union lost its case and was ruled not alone to be breaking the agreement but to be dumping. We now have reforms in the sugar sector regarding direct payments and the Carlow sugar factory is closing down.

What we need to do is recognise that these events are happening as a result of the World Trade Organisation agreement on agriculture. It is not developing countries that are to blame. Overall, Ireland and the European Union are benefiting greatly from world trade. We must make sacrifices. Trade must work both ways. We made sacrifices regarding the textile and fisheries industries when we initially joined the European Union. We must also make sacrifices when we join open world markets. In agriculture, a commodity such as sugar is one example of where we must make sacrifices.

Let me give an example of the damage we are doing. Ireland's aid to Mozambique amounted to €31 million in 2003. The losses to Mozambique also amounted to €31 million as a result of its inability to trade in the sugar sector because of EU sugar subsidies. That €31 million equates to the total Mozambique Government spend on agriculture and rural development. Ethiopia is another example, to which Ireland's aid amounted to €28 million. It is reckoned that Ethiopia lost €19 million because of its failure to participate in the sugar trade. Again, €19 million equates to the total Ethiopian Government national spend on its HIV-AIDS programmes.

It is not suggested that Irish farmers should bear the brunt of our sacrifices for participating in world trade. There are alternatives. Direct payments, provided they do not subsidise and are completely decoupled, are one. Another which should be investigated and has been studied is biofuels. The 2003 EU biofuel directive requires that by the end of this year 2% of petrol and diesel should be replaced by a renewable fuel. In Ireland the one technical option that is feasible is bioethanol. Carlow sugar factory has most of the plant in place for processing bioethanol which would offer an alternative to sugar beet for farmers.

The second point regarding developing countries' failure to participate and compete brings me back again to Ireland and the European Union. When Ireland joined the European Union, it was the developing country of Europe. It is now the great success story of Europe. What primed Ireland and got it going was Structural Fund moneys and derogations. Derogations were the order of the day for years, while Ireland received enormous amounts of Structural Fund money. However, it was not expected to compete with the powers of Europe when it initially joined the open markets. It was greatly helped by Structural Fund moneys and derogations. This needs to be applied to developing countries also as they badly need infrastructural fund moneys and derogations to allow them to work their way in.

The application of the agreement on agriculture in open markets needs to be questioned. There are thousands of small farmers selling perishable products to a few large multinational buyers. Open markets have not resulted in farmers getting high prices for their products, nor in low food costs for consumers. Sugar is the great example. In Europe we pay three times the price for sugar for which it is being sold on the world market. Those who profit are the processors. An example is British Sugar which gets enormous subsidies and has 25% profits, the highest in the manufacturing sector, not just the agribusiness sector.

The issue of who benefits overall from open market policies in farming needs to be questioned. If it continues, it is reckoned that of the 3.1 billion people living on the land, two billion will be redundant if we continue to move to the efficiencies of modern agribusiness. The same applies to China. If China modernises, it is reckoned that 500 million farmers will be lost from the land. The efficiency of having that number off the land and unemployed does not tie in with overall efficiency.

Conall Ó Caoimh

For the past seven or eight years, close to ten years, Comhlámh has been working on developing country interests and how they are affected by trade. Our focus has been particularly on the World Trade Organisation. In the past year African groups have been asking us not only to look at what is going on at the World Trade Organisation but also at what the European Union is doing in its bilateral, one-to-one relationship with developing countries, linked to its aid programme.

The European Union is negotiating what are called economic partnership agreements with 77 countries in the African, Caribbean and Pacific group — ACP countries. This has been taking place under the umbrella of the Cotonou agreement — Europe's aid relationship with developing countries — under which money is given to them for development projects and there is preferential trade access to developing countries for particular products. There is also political dialogue, in which I am aware some members of this committee have been involved at various stages. What Europe is now saying to them is that the aid money and the political dialogue will continue but to continue to receive the trade element, the most valuable element from a development perspective, they must now open up their markets and allow European products into their countries. The extent to which this must be done is greater than what is required by the World Trade Organisation. If we are uncomfortable with the degree to which this is happening at the WTO, we have extra cause for concern regarding what is happening in the context of the economic partnership agreements. They mean the complete elimination of tariffs and quotas, including export quotas, and the opening up of services areas and areas that Europe was seeking to add to the agenda at Cancún but the developing countries refused.

This is to start on 1 January 2008 and it is intended it will be fully in place over a ten year period. If it goes ahead, we can expect significant job losses in developing countries as developing country producers will have to compete with European producers who are at a much different scale of production. We can also expect government revenues to decline. We understand that in the case of Tanzania as much as 14% of total government revenue will be lost. The calculations, done not by us but by the ACP group of countries, show that Tanzania will suffer a 36% loss of its import revenues, which account for 42% of its tax base. We can, therefore, expect a full 14% loss in Tanzania's revenues. That will impact upon everything its government seeks to implement. It will also affect the effectiveness of Ireland's aid programme. We give aid to Tanzania and other priority aid countries on the basis that they will progressively take on a greater responsibility for the projects we are supporting. However, if there is a 14% cut in government revenue, how can Tanzania take on responsibility for the areas Ireland is supporting?

I will leave other issues to be dealt with by way of questions.

Deputy Durkan

I thank Comhlámh for its presentation and giving us the opportunity to focus attention on this issue which is becoming increasingly important. Since the Lomé agreements 1 and 2 there has been a general recognition that developed countries have a responsibility towards developing countries. That is still maintained. In Europe we look to the United States and ask whether the spirit of the Lomé agreements has always been implemented. I have been critical in that respect during the years. It was felt Europe had generally honoured its commitments to a far greater extent than the United States.

The European Union is now demolishing subsidies and supports to the concern of many producers here. There is a case to be made for co-existence. This is a food producing country and, in recent times, some of our colleagues in Carlow expressed concern regarding the proposal to close the sugar factory there. I note the proposal that the plant be used to produce bioethanol. That is a useful and constructive proposal which I hope will be taken up.

I agree with the concept of support and ensuring the concept of free trade applies in the way it should. I am somewhat concerned, however, that Ireland which is essentially a food producing country might find itself slowly and inexorably removed from that area of production. The economic theory is that as the standard of living improves, there will be less need for Ireland to have a base as a food producing country but I do not accept that argument. If there was a strike in the United Kingdom or French ports, vital supplies of food would be at a premium. That should be borne in mind in this debate, given that we are involved in the production of food.

There are countless ways of supporting the operation of the concept of free trade which was first adopted during the negotiation of the Lomé agreements when it was recognised that there was a need to intervene positively in terms of trade in developing countries. The degree to which some of those countries have since been successful is debatable. Comhlámh has indicated to the joint committee the reasons for the lack of greater success. Opening up markets is probably the best way to proceed.

Controlling large numbers of small suppliers and producers selling perishable products to multinational corporations is not a new concept. We have heard it all before. I agree with Comhlámh that it causes problems for producers who are not in a position to co-ordinate the market to the same extent as processors or buyers. I am fully supportive of the concept of a free and open market that works in both directions and of the abolition of subsidies as the European Union is doing but there is one proviso. I would not like to see Ireland leading the programme to stop the off-loading of food products in other countries unless our European colleagues play an equal role. This is a core element of the French and German economies. I would like to see those countries making the same sacrifices for developing countries.

Deputy Mulcahy

I too welcome the representatives of Comhlámh. I am somewhat puzzled by the concept of reciprocity, on which I have two questions. Why is this a priority for the European Union? I would have thought most of the ACP countries would be unable to afford EU products. Therefore, I cannot understand why it should be a priority for the European Union to gain access to these markets. I am sure organisations such as Comhlámh have pointed out to EU officials the problems there will be with reciprocity. Going on the perhaps false assumption that everybody who works in the European Union is reasonable, what is their argument for insisting on reciprocity when the counter argument is put to them that this may damage the economies of ACP countries?

Deputy Andrews

I am not a member of the joint committee. However, I wanted to lend my support to Comhlámh on this issue. Nobody seems to understand the EPA issue, on which I have received a briefing from Comhlámh. I was also in Ghana with the Ceann Comhairle last January where we raised this issue with NGOs. It is a real problem. There is no question but that it is having a real effect on indigenous industry. The Singapore issue is also important, particularly government procurement. Everybody knows these countries have huge natural resources. However, their extraction is almost always in European hands and there is no gain for the state in those circumstances. It is worrying that the European Union is insisting on equality of access to these resources into the future. In this respect I accept what has been said by Comhlámh. I have seen it in action.

This is a useful exercise. I am aware that Conall Ó Caoimh has worked hard to try to increase debate on this issue. However, there is no debate. People do not seem to understand or realise what is happening in terms of changes in trade. One of the great challenges for the European Union in the next 50 years is to try to work towards development issues on a much greater scale.

I support Comhlámh's briefing document and have seen the problems on the ground. I thank the joint committee for its time.

Deputy T. Dempsey

I welcome the representatives from Comhlámh. I am new to politics, having been elected only a couple of years ago. I have heard various groups address the joint committee and tell us what they are doing to try to develop the economies of the least developed countries. I come from a county that is highly dependent on agriculture and where agriculture has changed dramatically in recent years. In my parish there are now three farmers who farm 6,500 acres between them. There is huge depopulation of farmers, which is probably good because Ireland is engaged in agribusiness.

What surprises me when I meet groups such as Comhlámh is the lack of emphasis on personnel. Mr. Slattery spoke about infrastructure and derogations. I used to manage the Wexford hurling team. I know a young Wexford hurler who is an engineer and who wants to go to the least developed countries to help them to build roads but he does not know where to apply. He is prepared to go voluntarily. Since he told me I have watched television quite a bit and have yet to see an advertisement in that regard. I used to be a teacher and three of my former pupils who wanted to volunteer also told me they did not know where to apply. On a trip to Lanzarote with the hurling team I asked a young hurler who was sitting beside me whether he had ever thought about going. He also said he had but did not know where to apply.

It surprises me — I do not know whether Comhlámh or any other body can do anything about it — that the European Union has endless amounts of money to assist the developing world that has never been claimed. I do not know how that can happen. However, I have been told and believe it has happened. Surely there must be some group such as Comhlámh which could set up a structure to help people in the developing world to claim the money that has been put aside by the European Union.

I see no real conflict between the World Trade Organisation and farming in County Wexford. However, there are farmers who do. Farmers in the county are the biggest growers of beet in Ireland and some of them believe World Trade Organisation agreements have led to the demise of the sugar factory. I would like to hear Comhlámh's comments.

Deputy Eamon Ryan

I apologise for missing the start of the presentation. Unfortunately, I was unable to get away. I am not a member of the joint committee but have an interest in the issue being raised, that is, concern regarding EPAs. I support Comhlámh and add my party's concerns about the nature of the development of trade arrangements between the European Union and the poorest countries, particularly regarding the proposed use of EPAs as the future direction of European trade negotiations.

Where does responsibility for decision-making lie as between the Department of Enterprise, Trade and Employment and the Department of Foreign Affairs? Which Department has the final say as to our negotiating position? Is it clear to Comhlámh what our position is? Is there transparency and openness? I have found it almost impossible to get full and frank openness regarding our position when questioning the Minister for Enterprise, Trade and Employment. Is Comhlámh clear as to where the Government stands on this issue and, if not, how do we get that transparency?

Chairman

Conall Ó Caoimh may reply in a moment. My experience is that officials of the Departments of Enterprise, Trade and Employment, Agriculture and Food and Foreign Affairs meet regularly to discuss developments. They have been in favour of development and moving on with the World Trade Organisation position which, I hope, will move a good deal next December at the meeting of Ministers. Having said that, they will always be concerned about the extent to which unemployment might grow here and the transitional arrangements that might have to be made.

One of the questions is whether, with the expiry of the peace clause and the introduction of reforms in the sugar market, the concerns of Third World countries are now considerably advanced. Are they reasonably satisfied they are making progress?

Deputy Mulcahy raised the issue of reciprocity. When addressing a group in Brussels in January, Commissioner Mandleson acknowledged that the European Union economic partnership agreements, EPAs, had come in for much criticism by the NGO community. He also expressed his readiness to strengthen the development focus of EPAs. In that context, he highlighted a number of points, one of which was particularly relevant, that the EPAs should be geared towards south-south economic integration, region by region. The agreements are in place to build markets primarily for the benefit of African, Caribbean and Pacific countries, not to open aggressively the ACP market to the European Union. Regional integration on the basis of stable and predictable rules is the determining factor in promoting investment. Our understanding is that the negotiations will be as flexible as possible in establishing the duration of a sufficient transitional period. One must have transitional arrangements. What comes to mind is how important such arrangements were to Ireland in earlier days.

The Cotonou agreement sets out the final product coverage, taking into account sensitive sectors and the degree of symmetry in terms of the timetable for tariff dismantlement while remaining in conformity with prevailing world trade rules. In current circumstances, we must keep a careful watch. In that respect, the point raised by Deputy Mulcahy is very important.

Conall Ó Caoimh will now have an opportunity to reply to the questions raised.

Conall Ó Caoimh

My colleague will reply to the questions on agriculture, while I will deal with economic issues.

In response to questions on the economic partnership agreements, the European Union's interest is to get in ahead of other powers, particularly the United States. Significant markets are opening with the growth of the middle class in countries such as Kenya, the Ivory Coast, Ghana and Nigeria. It is very advantageous for European companies to have African markets in which to offload and get rid of large inventories any time there is a recession in Europe. However, that will put companies out of business in developing countries. The European Union is the largest trading partner of those countries and wants to ensure it retains that leverage. In Africa the European Union is the hegemony and this is a mechanism in the strategic self-interest of retaining that position.

We met the European Commission representatives in Brussels two weeks ago to discuss this issue and they actually told us they were in listening mode and that they had heard our arguments but did not reply on the day. They will meet us in a month's time to reply to the points raised. We have prepared a one page text in which we suggest the joint committee invite Commissioner Mandleson to come and explain the issues to it. Commissioner Mandleson has already spoken to the Development Committee of the UK Parliament. We would appreciate an opportunity to debate this issue with him before the joint committee.

I thank Deputy Andrews for his support. We have met officials from Development Co-operation Ireland and the Department of Enterprise, Trade and Employment but there does not seem to be a significant level of communication between them on this issue. I do not blame them for this because it is only in recent months that we have raised the issue. Our focus was primarily on the World Trade Organisation. However, African groups brought the issue to our attention and it is only since Christmas that we have been bringing it to the attention of the two Departments involved.

Deputy Eamon Ryan

Are the Department of Enterprise, Trade and Employment officials who are involved in the European Union representation in the WTO process directly involved in the discussions on EPAs?

Conall Ó Caoimh

The trade Department and the trade commission are involved in the negotiations. When we met the titular representatives on the 133 Committee ten days ago, they promised they would contact Development Co-operation Ireland to learn more about its concerns in this area.

Deputy Eamon Ryan

Given that those bodies and the Department of Enterprise, Trade and Employment have the direct line to the development of this proposal, I imagine that their interests carry more weight than the interests of those on the development side who are not included in the membership of the committee.

Conall Ó Caoimh

The dynamic of the 133 Committee is that countries speak up for their defensive interests but one needs somebody to speak up for the development interests. Likewise, we encourage the joint committee to invite the Minister for Foreign Affairs, Deputy Dermot Ahern, as well as the Minister of State, Deputy Conor Lenihan, to discuss the issues which are of significant concern and have a direct impact not only on developing countries but also on Ireland's development programme in the countries concerned.

Deputy Mulcahy

Who will ultimately decide? Will it be the Council or the Commission?

Conall Ó Caoimh

The Council will sign off on the agreement but the Commission has a mandate to negotiate.

Chairman

The Commission will make proposals to the Council. The members representing different countries who will be advised by their officials when going to the meeting of Ministers will express their views and will look at the issues in detail.

Deputy Mulcahy

If the Council fails to reach agreement, can it be decided by comitology?

Chairman

Does the Deputy mean by committees?

Deputy Mulcahy

No. Comitology is a process whereby when the Council does not agree, the Commission can decide by default.

Deputy Eamon Ryan

I think it is advised by the 133 Committee in making its recommendation to the Council.

Conall Ó Caoimh

It is. There is no indication at European level that any country will scupper this when the Commission comes back with it. A number of countries are talking about forming a like-minded group, including Luxembourg. In Dublin, the head of the Luxembourg equivalent of Development Co-operation Ireland said he considered it inadvisable that reciprocity was included in the EPA negotiations. In the Scandinavian, Dutch and UK Governments there is talk about forming a like-minded group. We ask the joint committee to encourage the Minister, if such a group is coming together, to ensure Ireland will be an active member of a like-minded group which would reduce reciprocity as the train speeds in that direction.

Deputy Eamon Ryan

Is the Government's position clear?

Conall Ó Caoimh

The Minister of State, Deputy Conor Lenihan, when responding to parliamentary questions, took the Commission's line. However, we think there is a need for a greater examination of the issue and more concern about it. That is the reason we are thankful for the opportunity to appear before the joint committee.

The Chairman quoted Commissioner Mandleson and his suggestion that south-south trade was the way to go. We very much agree with him and Commissioner Mandleson. However, the economic analysis done in a number of academic studies around the world shows that EPAs will actually displace south-south trade. Tanzania and Uganda import a large amount of their industrialised produce from Kenya. Economic studies show they will no longer import many of those products from Kenya but instead get them from the European Union and that the European Union will displace regional trade. Therefore, EPAs are questionable. If they had several generations to be implemented, regional integration might happen in advance of the imposition of competition by the European Union. However, it is happening within a ten year framework. It should be remembered that the European Union started in 1956 and that it was 1992 before we had the Single Market which does not yet involve services, yet they are part of this. We are at a much different level of development and have had decades to adjust but only ten years are allowed for this.

The WTO talks are ongoing — there is a meeting in Hong Kong in December. The solution is to go back to the WTO and change Article 24 of GATT which the European Union is using as the excuse for doing this. Together with ACP countries, we have a sufficient majority to change that rule at the world trade talks if the European Union has the political will to do so.

Chairman

I thank Comhlámh for giving us its papers today. They are very helpful. This issue will be very important between now and December. We will probably take up Comhlámh's suggestion that we have discussions with the relevant Ministers and their officials.

I am conscious of the question of timing and transitional arrangements, especially regarding farming. We have gone through the processes and they apply at both ends. The shock here will be very bad but the shock to those who are so low on the development scale will take a lot of time to adjust to. Nevertheless, if the transitional arrangements are borne in mind in both directions, it will be possible to move on quickly from the point of view of the developed countries.

Conall Ó Caoimh

The difficulty is that the transitional arrangements require to be completed within ten years but that is not realistic. Some change must be made. It is at the WTO that we can get permission to make such changes. Everybody in the room agrees that ten years is not a realistic period in which to expect developing country producers to be able to respond to competition.

Chairman

We will also have a situation where farmers and producers from developed countries will move into developing countries and begin operating in a very sophisticated and substantial way. That will lead to smallholders in those countries coming off the land and urgently facing a period of transition.

Conall Ó Caoimh

The case on the table concerns sugar. If pure liberalisation is what the European Union is considering, it is not the least developed countries that will benefit. The farmer groups are correct and accurate when they say it is the big countries such as Brazil that will benefit. I lived in Brazil for three years and my heart is very much with it. However, the least developed countries such as Mozambique and Tanzania need to be given a quota of supply to the European market which they would be well able to supply at a competitive price. As the European Union's involvement in sugar production changes, it must give its quotas to the poorest countries. We believe that would be consistent with giving support to smaller Irish farmers also.

Deputy Gregory

Could the joint committee also follow the recommendation that we invite the EU Trade Commissioner to meet us?

Chairman

We will follow up on the whole package. Does Mr. Slattery want to comment on the agricultural side?

Mr. Slattery

There are a couple of points to be made. I agree that our French counterparts and others need to be brought along with us. As our opportunities for meeting them are not too good, we hope the joint committee will carry that message to them.

There was talk of our commitment to developing countries. The first point I was trying to make was that it was not just a matter of commitment or any kind of moral issue. We have signed up to an agreement on agriculture within the World Trade Organisation. It is a legal agreement and we have been found to be in breach of it. We need to keep to such agreements. Unfortunately, Ireland is an agricultural country and as an agricultural country, it is difficult to keep to them but they are legal agreements and we are bound by and need to move on them.

Even after direct payments, it is reckoned that the price of sugar in the European Union will still be twice the world price. Sugar going out of Europe will still be subsidised.

The overall picture within agriculture needs to be questioned. Farmers have not gained. They are still being subsidised as they are getting direct payments. However, they are still getting an extremely low price for their produce both in Ireland and worldwide. The open markets have not done them any favours. They are not winning. The open markets have not done any favours for consumers of food either. Consumers are not benefiting from cheap food prices. In Europe we are paying three times the price for sugar. We could be buying it at one third of the price. Sugar costs $200 a tonne on the world market. It costs $600 dollars a tonne in Europe. Therefore, consumers are not benefiting from low food prices. Who is gaining? The answer is the industry — processors are gaining. The fear is that it is really big business that is in control of these agreements, not our political negotiators. The agricultural trade within open markets needs to be reviewed in terms of who is in control, both from an Irish and world point of view.

The efficiencies of high input agriculture need to questioned. For example, if China wants to compete with high input agriculture, it will lose 500 million farmers from the land. If 500 million farmers are taken off the land in China, where will they go? They will not be employed elsewhere. In Ireland we, at least, have the opportunity of employing people elsewhere. That is significant in terms of what will happen to aid. Will aid be used instead? Open markets have not worked for farmers or consumers. Should they be reviewed overall?

Chairman

We went through a similar process here during the 1940s and 1950s when we had nearly 50% of the population involved in agriculture. There was a constant leaving of the land. That is why reasonably long transition periods are needed in order to develop technologies and other off-farm activities and specialties. That should be emphasised. There is also the question of massive wide-scale farming.

We have probably done enough today on this issue and should move on to other business. Comhlámh's presentation to us has been very helpful. All I can do is present it with one of our reports on our visit to Ethiopia and Uganda which we have received today.